Goodman execs whacked on pay after second strike
Industrial property powerhouse Goodman Group will modify its generous incentive scheme for top executives, including founder and chief executive Greg Goodman, after copping a second strike against its remuneration report, along with protest votes over its executive directors’ performance rights.
A follow-up motion to spill the board, triggered by the consecutive strikes against the remuneration report, was nevertheless soundly defeated.
At issue are the earnings hurdles by which the long-term incentives paid to Mr Goodman and Goodman’s top managers, including executive directors Danny Peeters and Anthony Rozic, are assessed.
Mr Goodman collected $15.77 million in total remuneration for the 2022 financial year, while Mr Peeters and Mr Rozic received $4.8 million and $6.1 million. Five top executives picked up $5.5 million or more.
Two proxy advisory firms recommended against the remuneration report, prompting a 28.9 per cent vote against by institutional investors. A vote below 75 per cent in favour constitutes a strike.
“I understand the main concern expressed by the principal advisory firm was based largely on their view that the EPS [earnings per share] hurdles are not sufficiently challenging. We strongly disagree with this assessment,” chairman Stephen Johns told shareholders at their annual meeting on Thursday.
Criticism of the incentive scheme arose because the board had used an “economic value approach” to assessing the earnings hurdle rather than “the face value approach more commonly used by the market”, the meeting was told.
Mr Johns said the board had subsequently accepted face value “as the primary determinant of quantum”. As result, the incentives that will be awarded in the 2023 financial year to Mr Goodman and the group’s key management personnel “have been significantly reduced”, he said.
Based on the face value of the maximum potential outcome, Mr Goodman’s proposed award of incentives for this year has been slashed by 46 per cent, while five other top executives incentive awards will be trimmed by 33 per cent.
The biggest property player on the ASX, the $33 billion Goodman has also taken one of the biggest hits amid the broader correction to the sector. Its stock is down around 31 per cent year to date, while the sector has dropped 22.5 per cent.
But Goodman is also the sector’s biggest earner, with a $1.5 billion operating profit in fiscal 2022, up 25 per cent. More growth is to come, with Goodman flagging an 11 per cent increase in EPS this year.
“We understand the market environment is more challenging moving forward, so we continue to be cautious in our approach to risk management,” Mr Goodman told investors on Thursday.
“But we also understand that we’re in a world where our customers are still working to drive efficiency and productivity out of their facilities.”
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